The New Industrial Age

1. Unit 7 - New South, Last West, Industrialization RUSH Mrs. Baker The New Industrial Age

2. In the provided blank space: Do-It-Now (Part 1): Identify the characteristics of the 1st Industrial Revolution (early to mid 1800’s)

3. Review:Key Economic Issues in Post-War America

4. Introducing Unit 7… Reading Activity: Defining the Gilded Age

5. To analyze the effects of various scientific discoveries and manufacturing innovations on the nature of work, the American labor movement, and business. Objective:

6. Long Term Immediate • Abundant natural resources • Use of early power sources such as water and coal • Invention of the steam engine • Construction of roads, canals, and railroads in early 1800s • Cheap labor supply provided by increasing immigration • Burst of technological innovation • Expansion of railroads in late 1800s • New management techniques and business strategies • Investment capital Causes of the New Industrial Age

7. The Big Idea • The Second Industrial Revolution led to new sources of power and advances in transportation and communication • Main Ideas • Breakthroughs in steel processing led to a boom in railroad construction • Advances in the use of oil and electricity improved communications and transportation. • A rush of inventions changed American’s lives. The Second Industrial Revolution

8. Technological advances were important to Second Industrial Revolution, period of rapid growth in U.S. manufacturing in late 1800’s • Bessemer process • Invented mid-1850s • Allowed steel to be produced quickly and cheaply. • Helped increase steel production from 77,000 tons in 1870 to more than 1 million tons in 1879. • As steel dropped in price, so did the cost of building railroads, generating a boom in railroad construction. • Growth of railroads helped the country expand and prosper. Breakthroughs in Steel Processing

9. Chemists invented a way to convert crude oil into fuel called kerosene in the 1850s. Kerosene, which could be used for cooking, heating, and lighting, created a demand for oil. A huge oil industry developed after a way to pump oil from the ground was developed in 1859. Advancements in Oil

10. Invention spread • Inventor Thomas Edison • Held more than 1,000 patents • Worked to invent an electric light. • Edison and his team introduced the first practical electric lightbulb in 1879 • Edison created a power company to distribute electricity, but could not send it over long distances. • George Westinghouse built a power system that could send electricity many miles across the country. Development of Electricity

11. Menlo Park

12. New telegraph technology connected the United States with Britain by cable. • Alexander Graham Bell patented the telephone in 1876. • Telephones were rapidly adopted. • Number rising from 55,000 in 1880 to almost 1.5 million in 1900. Inventions Change Americans’ Lives

13. The automotive industry grew in steps. • 1876: German engineer invented the gasoline-powered • 1893: The U.S. built its first practical motorcar. • 1908: Henry Ford introduced the Model T. • Ford was the first to implement the moving assembly line in manufacturing • Cars became more affordable. • Wilbur and Orville Wright invented an airplane powered by a gas engine in 1903. Automobiles & Planes

14. The Model T Henry FordI want to pay my workers so that they can afford my product!

15. 1st Flight at Kitty Hawk, NC

16. Creating Modern American Business Big Business

17. The Big Idea • The growth of big business in the late 1800s led to the creation of monopolies. • Main Ideas • The rise of corporations and powerful business leaders led to the dominance of big business in the United States. • People and the government began to question the methods of big business. Big Business

18. Capital: • Tools, machinery, and money for investment • Capitalism: • Economic system in which tools, machinery, and factories are privately owned and managed. Understanding Key Concepts of Big Business

19. Proprietorship: • Single ownership • Partnership: • Multiple ownership • Corporation: • Business in which many investors own shares usually called stocks. • Stock: public ownership of a corporation which can be bought. Different Forms of Big Business

21. Monopoly • Consolidation of all competing businesses • Conglomerate • Corporation that owns a group of unrelated companies. • Pool • Competing companies in one field entered into agreements to fix prices and divide businesses • Trust • A group of corporations in the same or related fields sometimes agreed to combine under a single board of trustees that controlled the actions of all the member corporations • Holding Company • Bought controlling amounts of stock in different corporations rather than take operations directly as a trust did. The Strategies of Big Business

22. Definition: • Risk taker • People who take responsibility for the organization and operation of a new business venture. • Examples: • Andrew Carnegie • John D. Rockefeller • J.P. Morgan • Henry Ford Big Business Entrepreneurs

23. Many entrepreneurs formed their businesses in the late 1800s as corporations. Corporate leaders were some of the most widely respected members of American society. Successful corporations rewarded not only the people who founded them, but also investors who held stock. Corporations encouraged more investment in businesses because stockholders could sell stock whenever they wanted. Rise of Corporations and Powerful Business Leaders

24. A series of new management techniques were developed to create monopolies… Monopolies Vertical Integration Horizontal Integration

25. One of the most admired businesspeople of the time. • Focused on steel-making. • Used vertical integration to gain control of industry Andrew Carnegie

26. When a company buys each stage of the production process. • Goal • Lowers production costs • Gives a company control over the process • Improves quality • Improves availability • But… limits competition. Vertical Integration In 1901, Carnegie sold business for $400 million.

27. Standard Oil Company was country’s largest refinery. Developed horizontal integration owning all businesses in a field. Formed a trust to increase control of industry. John D. Rockefeller Believed competition was wasteful

28. When companies making similar products merge in order to have more control over the market. • Results- • Lowers costs by eliminating competition. • Keeps control of prices in the hands of a few men. • Price fixing Horizontal Integration By 1882, Rockefeller controlled 90% of American oil refineries In 1901, sold Standard Oil Trust for $900 million

30. J. P. Morgan • Financer • Profited by making loans to growing businesses • Consolidated bankrupt railroads in late 1800s. • Controlled electric, insurance and shipping companies. • Controlled world 1st billion dollar company • United States Steel Corporation

31. Attitudes and Regulation Big Business

32. Methods of Big Business • What methods did Rockefeller use to maximize profits, reduce costs, and eliminate competition? • Draw a picture depicting method • What methods did Carnegie use to maximize profits, reduce costs, and eliminate competition? • Draw a picture depicting method Do-It-Now:

33. People and the government began to view big business as a problem in the late 1800s. • Concerned about child labor, low wages, and poor working conditions. • Many business leaders believed in Social Darwinism. • Other business leaders believed that the rich should help the poor. • Carnegie, Rockefeller, and other business leaders gave away large sums of money to charities. Questioning of Big Business Practices

34. Practiced by U.S. government to protect and encourage American business. Laissez-Faire Economics Noninterference policy Government should not interfere in the economic workings of the nation.

35. Thoughts on Government "Law? Who cares about the law. Hain't I got the power?“ —Comment alleged to have been made by Cornelius Vanderbilt, when warned that he might be violating the law

36. Maintain expanding industries • Allow for continual growth of foreign trade. • Financial contributions made to politicians who set federal policies. • Legal and illegal Why was policy adopted?

37. Loans and land grants to large railroad companies • High tariffs • Discouraged foreign competition • Tight limits on money in circulation • Few limits on immigration How was the policy designed to aid big business?

38. Results: Minimal government interference = Entrepreneurs expand businesses & earn great wealth

39. Big Business defends Its actions…

40. English philosopher Herbert Spencer • “Survival of the fittest…” • Unregulated business competition would see weak businesses fail and healthy businesses thrive. • Used to justify the actions of entrepreneurs. Social Darwinism

41. Horatio Alger • Wrote popular novels in the late 1800’s • Depicted poor boys who became rich through hard work and luck. • Illustrated idea that: • Hard work builds character and leads to its own rewards. Depicting Social Darwinism

42. Carnegie Defends his Actions… Gospel of Wealth

43. Thoughts on Business “This, then, is held to be the duty of the man of wealth: First, to set an example of modest, unostentatious living, shunning display or extravagance; … and, after doing so, to consider all surplus revenues which come to him simply as trust funds, which he is called upon to administer… to produce the most beneficial results for the community—the man of wealth thus becoming the mere trustee and agent for his poorer brethren, bringing to their service his superior wisdom, experience and ability to administer, doing for them better than they would or could do for themselves.“ —From "Wealth," by Andrew Carnegie, North American Review (1889)

44. Critics said many businesses earned their fortuned through unfair business practices. • Used size and strength to drive smaller competitors out of business. • Powerful trusts sold goods and services below market value until smaller competitors went out of business, then raised prices. • Some people were concerned when a trust gained a monopoly. • The Sherman Antitrust Act passed in 1890 made it illegal to create monopolies or trusts that restrained trade. • Act did not clearly define a trust in legal terms, so it was hard to enforce. • Corporations and trusts continued to grow in size and power. The Antitrust Movement

45. Industrial Workers & Labor Movements Responding to Big Business

46. The Big Idea • Changes in the workplace led to a rise in labor unions and workers’ strikes. • Main Ideas • The desire to maximize profits and become more efficient led to poor working conditions. • Workers began to organize and demand improvements in working conditions and pay. • Labor strikes often turned violent and failed to accomplish their goals. Industrial Workers

47. Several factors led to a decline in the quality of working conditions in the late 1800s. • Machines and unskilled workers replaced skilled craftspeople. • These low-paid workers could easily be replaced. • They brought costs down and caused production to rise. • Frederick W. Taylor, efficiency expert, published The Principles of Scientific Management in 1909. • Encouraged managers to view workers as interchangeable parts. • Injuries increased, and conditions worsened. • Workers looked for ways to bring about change. Decline in Working conditions

48. Small, crowded rooms Specialization made workers tired, bored, and more likely to be injured. Managers paid less attention to working conditions. Stuffy air. Unsafe workplaces. Long hours. Low wages. No job security. Poor Working Conditions

50. Knights of Labor American Federation of Labor • First national labor union • Founded in 1870s • Pushed for: • 8 hour work days • Equal pay for equal work • End to child labor • Included both skilled and unskilled workers • Terence V. Powderly • Became leader in 1879 • Ended secrecy of organization • Organized individual national unions • Mine-workers • Steelworkers • Limited membership to skilled workers • Used collective bargaining • All workers acted collectively, or together, to negotiate with management Workers begin to Organize